Economics is the social science that analyzes the production, distribution, and consumption of goods and services.

Wednesday, 28 March 2012

Relationship between Marginal Cost (MC) and Average Cost (AC).





1. Relationship between Marginal Cost (MC) and Average Cost (AC). [based on the above picture]
2. Relationship between Marginal Cost (MC) and Average Variable Cost (AVC). [just change the "AC" to "AVC"]

Example Question : Explain the relationship between marginal cost and average cost. [6 marks]

suggestion answer:
  •  Diagram 2 marks
  • explanation = 4 marks

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